Tax-dodging deal is a wake-up call

The $160 billion Pfizer-Allergan PLC deal should have sparked outrage in every corner of America, most notably in Congress, but has anyone heard even a whimper?

No.

And that's surprising. Usually, Massachusetts U.S. Sen. Elizabeth Warren is the first Democrat to scream bloody murder over big deals that could mean bad things for the little guy.

And, realistically, Pfizer is on a path to reduce its tax payments, workforce and research in the United States.

In case you haven't heard the details, Pfizer, which is America's largest drug maker, purchased a smaller drug company, based in Ireland, in order to execute a financial tax inversion scheme. The legal maneuver allows Pfizer to relocate its U.S. headquarters, based in New York, to Dublin and -- drum roll please -- avoid paying higher corporate taxes in America.

Shareholders can celebrate that Pfizer will save hundreds of millions of dollars in tax payments to the U.S. Treasury -- money that can be used to pay higher company dividends and bonuses to executives.

At first glance, it seems a no-brainer to lash out at Pfizer. But that would be wrong. Pfizer is only part of the problem.

The real problem rests with a do-nothing Congress -- and that's where the real outrage should be directed.

Time and again the world's most elite politicians -- Democrats and Republicans -- have been put on notice that this slow Wall Street crawl would accelerate to a stampede, and yet they've done nothing.

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The answer is to reform corporate tax rates -- the highest in the industrialized world -- and stop the tax inversion exodus.

Pfizer is not the first major U.S. company to employ the tax inversion loophole and certainly won't be the last -- unless Congress acts to update the tax code.

Although Pfizer hasn't owed federal taxes since 2010 (that's a whole 'nother can of worms), it faced a 35 percent corporate rate by being headquartered in the U.S. In acquiring Allergan and reorganizing in Dublin, Pfizer will pay a 12.5 percent corporate tax rate. That's a big spread -- and the reason why other U.S. corporations are relocating to foreign countries, or considering it.

In addition to the loss of federal tax revenue, however, American workers and consumers stand to lose too.

Faced with lagging global sales, Pfizer has been shoring up profits by laying off scientists and shutting down research and development centers in the U.S. and United Kingdom. With the Allergan deal, Pfizer can lay claim to a new foreign workforce. Look for more Americans to lose jobs. Also, look for Pfizer to increase prices on U.S. medicines to pay off the Allergan deal.

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